Economic misery threatens ‘the death of France’
Businessmen are fleeing France’s new top tax rates while the economy flounders and politicians bicker. Must the government expose the fiercely protected French culture to the free market?
Few people are more flamboyantly French than the celebrated actor and director Gérard Depardieu. Restaurant owner, serial philanderer and maker of fine wines, Depardieu’s 40-year career has ranged from peasant poverty to extravagant wealth. He has lived in rooms rented from ageing prostitutes and spent holidays with Fidel Castro.
Now this outspoken national treasure seems set to leave France behind. Seeking to avoid a new 75% tax rate for the wealthy, Depardieu has bought a house in a town just over the Belgian border. There he will be joined by the world’s ‘arbiter in taste’ and 4th richest man, Bernard Arnault, and many others besides. Estate agents report that expensive French houses are flooding the market.
France is in crisis. Its economy, already sluggish before the global crash, has become so stagnant that a recent Economist report described the country as a ‘timebomb at the heart of Europe’. Employment remains above 10%, and its credit rating was last month downgraded by the powerful ratings agency Moody's. Is it time for France’s state-dominated economy to be blown open?
France has a more powerful central government than any other European country, with a public sector that makes up 57% of the whole economy and complex regulations governing the products that are made and consumed. Some goods (such as regional foods and bookshops) are heavily subsidised, while others are restricted from entering the country – beer, for instance, is heavily taxed in order to protect French wine.
Some economists think this model of ‘French exceptionalism’ stifles competition. But it is also responsible for creating a highly distinctive culture that is envied all over the world and draws 80 million tourists each year – more than any other country.
Without its protections for regional produce, France would struggle to maintain the mouthwatering diversity of its world famous artisanal food. Without government subsidies for filmmakers, the French cinema industry would not produce so many influential movies: at this week’s European Film Festival, for instance, French-language film Amour swept all the major awards.
«Vive la France!» say francophiles. Bustling markets selling beautiful local food, classy theatres in provincial towns, great art, great cinema, great books: this is the most wonderful culture on Earth. France must continue to protect it, whatever the price.
But free-market economists disagree. In its desperation to preserve an antiquated national culture, they say, the French government has held back the forces of development and change. Let the old idea of ‘France’ die. To escape economic self-destruction, the French must swallow their pride and allow a new culture to emerge from the struggle of genuine competition.
- Which are more important: jobs and financial comfort; or good culture, good food and plenty of holiday?
- Should governments protect the traditional culture of the country they rule, or allow it to change over time?
- If you could only protect three things from your own culture, what would you choose? Make a list and explain your decisions.
- Research ‘protectionism’ and write a brief definition of it. What are its weaknesses? What are its strengths?
Some People Say...
“France, je t’aime!”
What do you think?
Q & A
- I don’t care about French culture.
- Are you sure? You don’t, for example, eat brie, pâté, quiche, croissants or baguettes?
- No, actually, I don’t.
- How about films? Even if you can’t be bothered with subtitles, you have probably watched plenty of movies which have been heavily influenced by French cinema. Early French filmmakers invented many of the conventions and genres that have lasted into the present day, and 1960s ‘French New Wave’ had a huge influence on Hollywood.
- Still don’t care.
- Then how about your own culture? Each country has distinctive food, art and tradition, and governments must choose how far they should be protected. In the UK, for instance, government cuts are threatening everything from theatres to local post offices.
- New 75% tax rate
- In May, France elected a Socialist president called Francois Hollande, who had campaigned on a promise to make sure that rich French citizens paid their share of the burden of France’s economic woes. ‘My enemy is the world of finance,’ he has said.
- Bernard Arnault
- Though Arnault owns the biggest French supermarket chain, Carrefour, he is best known as the world’s greatest magnate in luxury goods. His companies produce high end fashion labels including Christian Dior and Louis Vuitton, expensive drinks like Moët champagne, along with many other super-expensive products.
- Credit rating
- When banks lend money, they need assurances that it will be paid back in full and the interest agreed. Credit ratings are a way of measuring the reliability of individuals, companies and even whole countries, by taking into account current financial security and previous behaviour. When a ratings agency like Moodys downgrades a country’s credit rating, this makes it much harder for the government to borrow the cash it needs to keep functioning in a normal way.